Govt may space out stake sale in Hindustan Zinc for 'best possible options'

Earlier this year, Hindustan Zinc said it could create separate legal entities for its zinc and lead, silver, and recycling businesses to help capitalise on 'distinct market positions'

The government could delay the offloading of its 29.54 per cent stake in Hindustan Zinc since it continues to look at its "best possible options", according to a report by The Hindu Business Line (BL).

According to officials, some of the suggestions include waiting out the decline in metal shares and timing the stake sale at an appropriate time, while others suggest that the offload should be held back till the time the committee report on the listing of mining businesses of the firm is reviewed.

An official told BL that the report is set to be presented by the second week of November or November-end.

Earlier this year, Vedanta's Indian zinc unit said it could create separate legal entities for its zinc and lead, silver, and recycling businesses to help capitalise on "distinct market positions" and attract investors as part of the wider Vedanta group's efforts to reduce a multibillion-dollar debt load. The company has appointed external advisors for a "comprehensive review" of its corporate structure.

Some officials are of the opinion that the restructuring might help improve the valuation of the government stake at the time of the stake offload.

According to industry insiders, the government want to make sure that its members stay on the board till the rejig plans are presented and then weigh in. Earlier this year, roadshows on the stake sale were carried out, although announcements regarding the stake sale did not happen.

Hindustan Zinc's Chief Executive Officer (CEO) Arun Misra was quoted as saying that the assessment of the corporate structure of the firm is on. Once the report is presented by the second week of November or around November-end, advantages and drawbacks will be discussed. The company wants to create value for shareholders. There is no problem in getting the government on board if the valuation of Hindustan Zinc rises after the restructuring.

At the present moment, Vedanta Ltd holds a 64.92 per cent stake in HZL. In 2002-2003, HZL, India's largest zinc/lead miner, was privatised in favour of Vedanta, with the government's 29.54 per cent stake categorised as public float. In 2021, after Vedanta lost the case to acquire the residual stake from the government, the Supreme Court allowed the government to exit by offloading the stake through public offers.